Observation within a healthcare setting refers to when a patient is staying at a healthcare facility but is not under the direct care of a healthcare provider. If a patient is under the direct care of a provider, that patient is referred to as admitted.
Whether a patient is classified as under observation or admitted has to do with the extent of care that is required. Usually, patients are put under observation if the extent of their care requirements is not immediately clear. While under observation, a patient may be admitted if more care is needed or discharged if no further care is needed.
Observation status also allows patients to remain in the care facility following a medical event or procedure. For example, an admitted patient may become classified as under observation following surgery.